Interview in Oklahoma City With Reporters From the Daily Oklahoman

March 16, 1982

Soviet President Brezhnev's Offer of a ``Unilateral Moratorium''

Mr. Gaylord. Mr. President, I wonder if you have any reaction to President Brezhnev's statement of pulling back some Soviet missiles?

The President. Well, yes, I do. It's one more of sorrow than irritation. I think it's time to stop playing these political games. You know, a unilateral freeze leaves them with 300 missiles and 900 warheads aimed at Western Europe -- against nothing. And what we're talking about in Geneva and what I spoke about on November 18th, I really mean. We can erase and eliminate that entire threat for both the Soviet Union and the Bloc, the Soviet Bloc, and Western Europe, by a reduction of those missiles down to zero. I'm ready and willing to -- well, we are meeting on that -- I'm ready and willing to meet him on the discussion of the other, the strategic missiles at any time on the same thing.

It just doesn't make sense for the world to be sitting here with these weapons aimed at each other -- the possibility of human error and the thing that can happen. But, as I say, this is a pretty easy freeze. You know, there were 250 of those missiles when we started to negotiate -- when I made my speech on November 18th. There are now 300. And it's pretty easy to freeze when you're 300 - 0.

Decontrol of Natural Gas

Mr. Cromley. Mr. President, we have to ask you a question that particularly pertains to our part of the country. You're saying that the phase-in of complete decontrol of natural gas is a remaining goal. I wonder if you could tell us possibly when you might recommend that or push for it?

The President. Well, as soon as it would be practicable. Right now, the information we have from up on the Hill is -- with this battle over the budget and the taxes and so forth -- they just are very reluctant to even approach this or let it be touched. So, we're kind of waiting for signals there.

President's Veto Power and the Budget

Mr. Standard. You mentioned yesterday that you wouldn't hesitate to use your veto power. Were you referring specifically to any attempt by Congress to repeal the tax cuts of last year?

The President. Well, any attempt to do away with what I think are the three basic fundamentals that are part of the program. Now I'm not fixed in concrete as to every specific in our program, if someone can come up and show me better ways of approaching the cut idea, or if there are better ways of meeting the incentive thing that I think the tax cuts are aimed at in restoring the economy. When I was Governor, I always refused to talk about vetoes until it was there on my desk, because I said what starts out to be an apple might end up an orange before it gets there.

But what I meant the other day was, I would not hesitate to use that veto if it is a case of gutting either one of these three fundamentals; in other words, reducing our inability to redress the imbalance in national security, if it's one that's going to reverse the course of incentive taxation to get the economy going again, or if it's one that is not going to legitimately approach the need of reducing the cost and size of government.

And I still think, as I say, there's some room in there for flexibility if someone's got some practical suggestions that will help all this. You know, one suggestion that's been made is cutting defense spending by, say, $10 billion. Well, you could totally eliminate every one of the major weapons programs that are in the defense budget, and you'd only cut the budget by $6\1/2\ billion next year. You wouldn't have reached that $10 billion. So where are they going to get it? Now I think a much more practical thing with regard to defense spending is what we have started already putting together.

You know, when I was Governor we went for a very unusual thing in State government -- the task forces, businessmen's task forces in which we got 250 or more of the most successful people in our State in their lines of activity to come in on task forces and go through government and, as I described it to them, ``Look at it as if you're thinking of merging; that is, a business you're thinking of taking over. What would you change? What are the business practices that could be employed to make it better and more efficient and more effective?'' And they came back after an average of 117 days with more than 2,000 -- or almost 2,000, I should say -- recommendations. We implemented 1,600 of those. Well, I'm going to do something like the same thing at the Federal level. We've asked Peter Grace of the Grace Company to chair these task forces, and the first place they're going to go is Defense.

Now they're not going to go in there to see whether you should do away with a weapon program or not. They're going to go in and see down through that vast structure what no Secretary from up on top can see for himself, by the way -- are there business practices that you wouldn't put up with in private business?

Federal Reserve Board

Mr. Gaylord. I want to ask about Mr. Volcker and the Federal Reserve Board. Don't you think he's a liability now instead of an asset to this country?

The President. Well, we've -- --

Mr. Gaylord. Of course, he was appointed by Carter, I realize.

The President. Yes, but I must say we've had some talks, and I think they hold to what -- they are legitimately trying to join with us in a path that we're taking. The trouble in the past has been that roller coaster. And the funny thing is, when they increase the money supply -- and this last time, the little spurt after the interest rates had started down, was because there was a spike going up. But now they are coming and trying to come close to their path between 2\1/2\- and 5\1/2\-percent increase and stay near the upper level because of this recession thing in that 5-percent frame. But there was a spike that shot up there in the last 10 weeks or so of the year, and with it went the -- as I say, a little spurt in the interest rates started up.

I think now, the real thing that is holding the interest rates up can be found outside of the Fed and outside of government. There had been so much over the last 40 years -- this is the eighth recession since the war -- there had been so much of that roller coaster, and every time that we've had a problem like the unemployment -- the money market out there has seen them do this money thing and then they've seen the resulting raise in inflation.

And I believe that what we're really up against -- and I talked to some business leaders the other day back there from the Roundtable, and they affirm this -- that there just is a lack of confidence that it isn't going to be the same old game, that Congress won't go through with the budget reductions, that they will see the same pattern. And so they're not going to lend that money with the possibility that inflation is then going to shoot up.

By every indication, our inflation rate is such that the interest rates should be much lower than they are. Last month, inflation was only running at 3\1/2\ percent.

Mr. Gaylord. Well, the interest rate shouldn't be over -- three points above that, should it?

The President. That's right, 3 or 4 percent above that.

Mr. Gaylord. Right.

The President. And it's averaged, since October 1st, the beginning of the fiscal year, it's averaged less than 5 percent. So, we think that we're doing -- but again, out there, they don't believe it's going to last. So they say they're waiting to see, that inflation's going to go up, or they're going to charge interest rates accordingly on the basis that they think it will.

News Leaks and Media Coverage

Mr. Cromley. Mr. President, what is your reaction to the leaks in the Washington Post in the Haig matter and also in the covert operations in Nicaragua? Is this damaging to our foreign policy?

The President. Yes, I think it is. Forgive me, but I think even more so perhaps where we get to the network news. I think there is a lack of responsibility that, on the basis of leaks -- and who knows where those are from or what motivates them -- they print things that actually can set us back.

Now, way back when the AWACS thing was going on, one such story, if I hadn't gotten on the phone, if there hadn't been a member of the Saudi royal family in the country to tip us off, all our efforts -- we're trying to recognize, we're trying to establish a bond with the Arab States, the more moderate Arab States, to where we can bring them into the peacemaking process with Israel. I don't think it does any good for us to be seen as just Israel and the United States on the one side and all of them on the other. Then we don't have any persuasive power. And this was what part of the AWACS was based on. And fortunately for this tipoff, I got on the phone. But it was a news story, just the kind you're talking about, in the same place. I got on the phone, and just in time, because in Saudi Arabia they were ready to call in the press and blast the United States, and that was the end of that.

But those things, and when I mentioned the network news -- in a time of recession like this, there's a great element of psychology in economics. And you can't turn on evening news without seeing that they're going to interview someone else who's lost his job, or they're outside the factory that has laid off workers and so forth -- the constant downbeat that can contribute psychologically to slowing down a new recovery that is in the offing.

Mr. Cromley. Can you attribute this to anything, Mr. President?

The President. Well, with regard to the network news, I wonder sometimes if it isn't the battle of the ratings, the Nielsen ratings, and if they aren't more concerned with entertainment than they are with delivering news. It's an entertainment medium, and they're looking for what's eye-catching and spectacular, not necessarily -- -- . Is it news that some fellow out in South Succotash someplace has just been laid off, that he should be interviewed nationwide? Or someone's complaint that the budget cuts are going to hurt their present program?

As a matter of fact, one station put a family on television some months ago, a man obviously disabled somewhat because he was limping, had been dropped from social security disability payments, and his wife was crying and didn't know what they were going to do, and the children were there all disconsolate, and so forth. Well, I saw that on television, I went storming into the office in the morning, and I said, ``Look, this guy's disabled. What are we doing?''

We hadn't taken him off. He'd been taken off disability in 1980 because it was found then that he was holding a job and had been holding a full-time job for 3 years while he was drawing disability payments. And yet, they ran it as if it was something that we had just done.

Mr. Cromley. Do you feel that there's a danger that your image, and rightful image as a compassionate, kind, generous man could be eroded by this sort of thing?

The President. I think there's not only a possibility, I think they've done a pretty good job of it. I'm Scrooge to a lot of people, and if they only knew it, I'm the softest touch they've had for a long time.

Budget Deficits

Mr. Cromley. Could I ask you about deficits for a minute, Mr. President? It seems that everybody from the right to the left is saying that your deficit is too high. I'm sure you think it's too high, too. Yet, it seems to be a ``Catch-22'' situation -- that is, they say they're not going to do anything about it, about anything in your economic program, until there's a lower deficit. Is there anything that can be done that you see?

The President. Yes.

Mr. Cromley. Beyond what you recommend?

The President. Yes. If the people will stand firm and make it plain the Congress, as they did last year -- -- . We've asked for $31 billion in additional cuts. Now, there's been no sign yet that we're getting those cuts in the Congress.

Mr. Cromley. That brings it down to $91 [billion], the $31 billion that you've asked be cut?

The President. Yes, the deficit is based on that, bringing down that spending. Now, there may be additional areas where we can reduce further, and we should be definitely thinking about it, but I'm just wondering if we can get that kind of bipartisan action with an election coming up or whether one side is willing to accept the situation in return for having some campaign issues.

Now, here we are, asking for $31 billion cut. The other side is trying to make an issue out of the deficit. Now, the deficit went up simply because of the recession. If you add one percentage point of unemployment, you add $27 billion to the deficit. It isn't that we had goofed in the estimates we had originally made, we made the estimates based on the situation at that time. And then when the interest rates persisted as long as they did -- and incidentally, then the money supply was way below the target mark -- if those persist, and then we have the unemployment that we've had, up had to go this deficit.

Right now, they think that we're being rosy. Stockman added a few billion dollars to the deficit the other day. Now, what was he doing it on? He was doing it because he felt conscience-bound, as we all do, on the projection -- now, it's purely a projection, a drought could change all this -- that we're going to have bumper crops to the point that the projection is that prices are going to be lower for the farmers, which is going to increase the government's payments to the farmers.

Now, at this very time that we're asking for these, and asking -- look, we'll talk to them about any additional cuts that can further bring this down -- an informal poll of subcommittee chairmen in the House the other day found that among them -- totals $29 billion in additional spending that they're discussing in their committees.

Now, I think someone should begin to ask now -- the '82 budget was our version of the budget that we had inherited, that had been laid out before us. And we cut that by around $49 billion. Now, where would the deficit for '82 have been if we'd gone with the budget that we had inherited? And where will that deficit that they're talking about be in '83 if they refuse to make the $31 billion in cuts?

So, I don't think they can have it both ways -- that the deficit is an issue at the same time they refuse to take any action or support us in any action that would reduce it.

1982 Congressional Campaigns

Mr. Standard. Mr. President, how active do you plan to be personally in the congressional campaigns this year?

The President. How active in the congressional campaigns? Well, all that I can do. I know that there's no way that a person could probably intervene. But I think in fundraising, I think the making of commercials, radio and TV, for candidates -- I want to do all I can, because I think it's all important. We've had here, last night, and in the two stops yesterday before here, Alabama and Tennessee, both instances, they had fundraisers in connection with that after I'd spoken with the legislatures. And so I'm going to do all that I can in that regard.

Mr. Gaylord. Mr. President, we've run out of time. Thank you very much, Mr. President. We appreciate it.

Note: The interview began at 10:05 a.m. at the Skirvin Plaza Hotel. Participating in the interview were Edward Gaylord, Allan Cromley, and Jim Standard.

The text of the interview was released by the Office of the Press Secretary on March 17.